U.K. Snubs $40 Billion Severn Barrage Tidal-Power Project

By Louise Downing -
Sep 18, 2013

The U.K. rejected proposals for a
25 billion-pound ($40 billion) tidal-energy barrage designed to
generate as much as 5 percent of the nation’s power needs.

The plan by Hafren Power Ltd. for a dam-like barrage won’t
offer value for money and may endanger the environment, the
government said in a report, affirming the findings in June of
Parliament’s Energy and Climate Change Committee. Hafren needs
to improve its proposal before receiving “serious
consideration.”

Tidal barrages harness energy from water traveling in and
out of rivers or bays. They allow unrestricted flows during high
tide before using turbines to capture the energy as the water
recedes. Funding such projects, including the one rejected today
on the Severn River, has been limited by tighter credit markets.

“Financing such a large asset isn’t currently possible in
the private market, not least due to the size of the financing
required but also the significant construction risk involved,”
said Andrew Cox, KPMG LLP’s global head of energy and natural
resources for transactions and restructuring. “Government
support would be the only means to finance such a scheme.”

The 18-kilometer (11-mile) project would need state support
for about 30 years through guaranteed payments for its power,
twice as long as an offshore wind farm, the government said in
the report published today on its website. Electricity prices
would also probably be “considerably” higher than Hafren
anticipates, it said.

‘Contempt’

“The contempt shown by the government towards the barrage
is shocking and ignores the benefits it would bring,” said
Peter Hain, a member of Parliament for Neath, which would be
close to the facility. The barrage will have a longer life-span
than either wind farms or nuclear plants and would need less
support than either of the other technologies.

“The wider benefits to the economy would be enormous, with
50,000 direct and indirect jobs created and 80 percent of the 25
billion-pound spend, from private investment, being in the U.K.
providing a key contribution to Britain’s economic
rejuvenation,” he said.

Hafren needs to provide more details on the potential
effect on the environment, economy, jobs and local industry from
the development, as well as its design, the government report
said.

Previous Decision

Earlier proposals for a barrage were axed in 2010 because
of the cost. The government said in May 2011 that the Severn was
open to private projects as the U.K. seeks to get 15 percent of
its power from renewables by 2020. That compares with about 9.4
percent now.

“The scheme would need a significant subsidy compared to
current market prices, and there seems to be little evidence
that the technology can be sufficiently competitive,” KPMG’s
Cox said in an e-mail.

While tidal barrages are used in other countries, none yet
operate commercially in Britain.

It would make sense to learn the lessons from a smaller
barrage project first, said Stephanie Merry, head of marine
renewables at the U.K.’s Renewable Energy Association. That way
environmental impacts can be assessed before attempting a
venture on the scale of the Severn Barrage, she said.

Alternatively the Severn could be a good site for tidal
lagoon projects, she said. These can generate large amounts of
power without the environmental effects of a barrage and
represent a “big opportunity” for the U.K., she said.

Tidal lagoons are areas of water that are separated from
the rest of the sea. Water is trapped and released from the
lagoon through turbines. Developer Tidal Lagoon Plc said in
April it was looking for investment to build a lagoon across
Swansea Bay in Wales.